Like many companies in the hospitality and tourism industry, a seafood, protein, and beverage distributor that serves major cruise lines faced difficult times during the COVID-19 pandemic. The company’s primary customer, like other carriers, halted operations for more than a year at the height of the outbreak, putting a damper on the distributor’s sales.
To make matters worse, at the end of 2021, the company’s bank asked that it exit its existing line of credit.
For more than a decade, the distributor had built a large business with a single cruise line. While lucrative during good times, the lack of diversity presented an issue with its line of credit. With the debtor concentration being so high, the debtor credit risk was uninsurable. No longer comfortable with the risk, the bank wanted out.
The distributor was looking to secure a $15 million facility for the existing bank line workout and to support expansion during a post-COVID travel surge. They were only to find a partner willing to go to $8 million.
That’s when LSQ got involved.
The LSQ Solution
The distributor’s situation was tricky; such a high single debtor concentration debt is an unenviable position. However, LSQ was able to work with an inventory partner, find credit insurance, secure the $15 million facility, and create a comprehensive credit and accounts receivable management program.
As part of the process, the distributor was also able to secure an additional $8 million inventory finance facility through a trusted partner.
“There were many people and outside advisors involved in this engagement working together to get this turnaround client onboarded and out of special assets with the correct debt structure,” said LSQ Regional Vice President Chris Collins. “LSQ’s Sr. Underwriter Mike Singer was committed to working quickly and we had the full support from Kesk Global Advising, the client’s advisor. These individuals moved mountains in order to position the client for the anticipated return of travel.”
“This was a complicated structure,” said Singer. “We were working with four different groups but their responsiveness and desire to get this done for the client allowed us to get it funded in 30 days.”
“In today’s financial market having the right partner to service your clients’ needs promptly and adequately is crucial,” Karel Lens, Senior Partner at Kesk Global Advising. “LSQ delivered the right solution for the client as promised.”
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